New to all of this but with my poker back ground and my hard work I feel like I can learn things pretty fast and have a slight head start over complete newbies to this world. I can see there many different option strategies, it's actually a bit overwhelming tbh as there are so many. Which ones would the seasoned pros here advise I focus on? Of course I could learn them all over time, but maybe only to be told I am wasting my time!? Also is there a guideline, maybe a link or book that tells you which strategy is best for which environment? Even once I learn many strategies I then need to know at which time would each one be best used, again I have no clue right now. So some guidelines/links would help a ton. Thank you for your time and any help.
There is no conditional probability in trading. I played a lot of HS PLO but I never saw the analog to trading, let alone vol-trading. You’re either short or long gamma. There is no inherent edge in structures for most traders.
You have to determine what trading style you want to adapt - Death by a thousand cuts - traditional trend and swing trading -or- - Picking up pennies in front of a steam roller I pick up pennies in front of steam rollers and it been a journey of more than a couple of years. Reason being is you have to get used to adjusting short option positions when the market moves against you. I learned short premium trading from Tastytrade and Option Alpha. And after you get down the basics there are some really good places to learn more advanced stuff. In the short option route you have to worry about vega and gamma, theta is your friend If you want to swing or trend trade you may want to master that first before jumping into options, because with the more traditional route you have to worry about theta, but vega and gamma are your friends The most important thing to remember Keep positions small Learn to take a loss
To start, learn vertical debit spreads. Its the backbone of almost any advanced spread such as butterflies, condors, and backratios. A good starting strategy that's directional is trading an at the money 2-5 point wide spread at around 30 days out. The key is to make sure your risk to reward is favorable. You want to make sure your risk is less than half the width of the spread. For example, if your bullish on TSLA, you could place a 440/445 call spread at 1.70. Max risk is the debit you're paying for the spread, here it would be $170. The most you could lose is $170, and if your right and TSLA expires above 445, your max win will be $500. You want to make sure you're paying $250 or less, which is the max reward divided by 2. The thought process here is its a 50/50 chance TSLA goes up or down. So with that you want to make sure you're paying less than 50% of the reward if your right. If you place the trade 1000 times (and direction is actually a 50/50 chance), you have positive expectancy.
Check out www.travelsandtrades.com. Patrick is an ex pro poker player who now trades options (and travels with his family) full time. His blog led me to www.tradingdominion.com, where he is still active in their community. Changed my entire trading paradigm, very cool group and very cool strategies.
This 100%. Set aside a few grand that you're 100% willing to lose. 5K is plenty to start and risk no more than $100-$200 per trade. Only up your allocation if you hit certain profit goals such as doubling your money.
In some ways of course this is nothing like poker, but in other ways I can see it is. As I said me being a pro poker player for 10+ years will give me a edge over someone who has never done anything like this before. How big of an edge I guess can be debated. Thank you for your reply
Does this translate to poker? From what I've read, good poker players are equivalent of long gamma traders - small/controlled losses and large wins when odds line up. Can poker be played well the opposite way?